Vanguard FTSE International Index Funds

Annual Report | October 31, 2018

Vanguard FTSE International Index Funds

Vanguard FTSE All-World ex-US Index Fund Vanguard FTSE All-World ex-US Small-Cap Index Fund

Vanguard's Principles for Investing Success

We want to give you the best chance of investment success. These principles, grounded in Vanguard's research and experience, can put you on the right path. Goals. Create clear, appropriate investment goals. Balance. Develop a suitable asset allocation using broadly diversified funds. Cost. Minimize cost. Discipline. Maintain perspective and long-term discipline. A single theme unites these principles: Focus on the things you can control. We believe there is no wiser course for any investor.

Contents Your Fund's Performance at a Glance. . . . . . . . . . . . . . . . . . 1 CEO's Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 FTSE All-World ex-US Index Fund. . . . . . . . . . . . . . . . . . . . . 6 FTSE All-World ex-US Small-Cap Index Fund. . . . . . . . . . . . 36 Your Fund's After-Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 62 About Your Fund's Expenses. . . . . . . . . . . . . . . . . . . . . . . . 63 Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Please note: The opinions expressed in this report are just that--informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus. See the Glossary for definitions of investment terms used in this report.

Your Fund's Performance at a Glance

? Global stocks rallied early in the 12 months ended October 31, 2018, but fell back amid trade tensions and tightening monetary policy. A rising U.S. dollar hurt international equities, with emerging markets hit especially hard.

? For the period, Vanguard FTSE All-World ex-US Index Fund returned ?8.49%, trailing its target index and slightly ahead of the average return of peer funds. Vanguard FTSE All-World ex-US Small-Cap Index Fund returned ?10.95%, in line with its target index and lagging its peer-group average. (Returns cited are for Investor Shares.)

? European markets and financial stocks detracted most from the FTSE All-World ex-US Index Fund's return, while Pacific markets and industrials were the biggest spoilers for the FTSE All-World ex-US Small-Cap Index Fund.

? Please note that shortly after the close of the period, Vanguard lowered the investment minimum for the FTSE All-World ex-US Index Fund's Admiral Shares from $10,000 to $3,000.

Total Returns: Fiscal Year Ended October 31, 2018

Vanguard FTSE All-World ex-US Index Fund Investor Shares ETF Shares Market Price Net Asset Value AdmiralTM Shares Institutional Shares Institutional Plus Shares

FTSE All-World ex US Index International Funds Average International Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

Total Returns

-8.49%

-8.70 -8.37 -8.37 -8.35 -8.33 -7.99 -8.67

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Total Returns

Vanguard FTSE All-World ex-US Small-Cap Index Fund

Investor Shares

-10.95%

ETF Shares

Market Price

-11.21

Net Asset Value

-10.87

Institutional Shares

-10.85

FTSE Global Small Cap ex US Index

-10.89

International Small-Cap Funds Average

-9.98

International Small-Cap Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

Admiral Shares carry lower expenses and are available to investors who meet certain account-balance requirements. Institutional Shares and Institutional Plus Shares are available to certain institutional investors who meet specific administrative, service, and account-size criteria. The Vanguard ETF? Shares shown are traded on the NYSE Arca exchange and are available only through brokers. The table provides ETF returns based on both the NYSE Arca market price and the net asset value for a share. U.S. Pat. Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.

For the ETF Shares, the market price is determined by the midpoint of the bid-offer spread as of the closing time of the New York Stock Exchange (generally 4 p.m., Eastern time). The net asset value is also determined as of the NYSE closing time. For more information about how the ETF Shares' market prices have compared with their net asset value, visit , select your ETF, and then select the Price and Performance tab. The ETF premium/discount analysis there shows the percentages of days on which the ETF Shares' market price was above or below the NAV.

Total Returns: Ten Years Ended October 31, 2018

FTSE All-World ex-US Index Fund Investor Shares FTSE All-World ex US Index International Funds Average International Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

Average Annual Return

6.94% 7.37 6.70

FTSE All-World ex-US Small-Cap Index Fund Investor Shares (Returns since inception: 4/2/2009) FTSE Global Small Cap ex US Index International Small-Cap Funds Average International Small-Cap Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

9.83% 10.26 11.81

The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor's shares, when sold, could be worth more or less than their original cost.

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Expense Ratios Your Fund Compared With Its Peer Group

Investor Shares

ETF Shares

Admiral Institutional Institutional Peer Group

Shares

Shares Plus Shares

Average

FTSE All-World ex-US Index Fund

0.23%

0.11%

0.11%

0.10%

0.07%

1.31%

FTSE All-World ex-US Small-Cap Index Fund

0.25

0.13

--

0.12

--

1.52

The fund expense ratios shown are from the prospectus dated February 23, 2018, and represent estimated costs for the current fiscal year. For the fiscal year ended October 31, 2018, the funds' expense ratios were: for the FTSE All-World ex-US Index Fund, 0.20% for Investor Shares, 0.09% for ETF Shares, 0.11% for Admiral Shares, 0.08% for Institutional Shares, and 0.06% for Institutional Plus Shares; and for the FTSE All-World ex-US Small-Cap Index Fund, 0.22% for Investor Shares, 0.12% for ETF Shares, and 0.11% for Institutional Shares. The peer-group expense ratios are derived from data provided by Lipper, a Thomson Reuters Company, and capture information through year-end 2017.

Peer groups: For the FTSE All-World ex-US Index Fund, International Funds; and for the FTSE All-World ex-US Small-Cap Index Fund, International Small-Cap Funds.

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